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Walgreens Boots (WBA; B1, BB Neg) New $5NC2 & Kamala Price-caps

CONSUMER STAPLES
  • New $29s +1.8pts/-50bp trading ~half the NIC away. Its open to retail (2k denom), as are most of the $ lines.
  • €26s have rallied in from wides, mids look fair here against $ curve.

Equities didn't take clear direction from last week's Kamala headlines on all things price caps. No firm view from us but hard to see any new regulation on prices as positive when its struggling on margins and losing market share. X-factor on net impact will be reimbursement rates and any offset from volume growth. More broadly, and despite the household name, we continue to recommend caution for those without a firm view; this is a high-risk co, struggling to be profitable in US healthcare and running a razor thin 1.7% margin in its core US retail pharmacy. Unclear what the impact will be of various announced restructuring (closing unprofitable US stores, moving away from VillageMD stake). We've seen similar wait-and-see caution from equity analyst (only 3/19 on buy despite stock trading at a P/E of 4x)

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